Disappointing sales result for Woolies’ first quarter

Jon Condon, 04/11/2014

Woolworths’ Australian supermarket division has notched up sales of $11.02 billion for its first quarter of 2014-15, an increase of 3.9 percent over the same period a year earlier.

WooliesThe result was described by market analysts as ‘weak’, and contrasted with a much stronger 5.8pc sales growth figure for biggest retail rival, Coles, lodged last Thursday (click here to read earlier story).

Woolworths chief executive Grant O’Brien said following a pleasing July result and ongoing growth in customer numbers and items sold for the quarter, trading was softer in August and September with growth impacted by differences in the timing of promotional activities compared to the prior year.

While first quarter sales were lower than expected, he said the company was confident that its trading plans would improve momentum in the second quarter, which includes the key Christmas period.

“We are focused on delivering lower prices everyday to our customers and launched our ‘Cheap Cheap’ campaign at the end of the quarter by reducing a number of prices on key household items,” Mr O’Brien said.

He said Woolworths was the first Australian supermarket to reduce the price of white bread to 85c and had also reduced prices on other staple products including lamb forequarter chops and beef mince. See Beef Central’s earlier article on Woolworths move into $5/kg mince, click here.

Online sales across the group increased more than 30pc for the quarter, compared with this time last year, with further development planned for the online business a key focus.

Managing director of Woolworths’ Australian supermarkets division, Tjeerd Jegen, said the company was focused on delivering lower prices everyday to its customers.

“In mid-September, we launched the ‘Cheap Cheap’ campaign which has resonated strongly with customers and will help further reduce the cost of living for Australian families by lowering prices on key household items,” he said. We have reduced prices on key products (like beef mince and lamb), demonstrating our commitment to being the market leader in price.”

Woolworths opened nine (net) Australian supermarkets during the quarter bringing its total number of stores to 940.

Woolworths ALH Hotels division, which features its Graziers branded beef in steakhouses, opened one new hotel during the quarter bringing the total number of venues to 328.

Woolworths shares slumped 4.9pc yesterday after the announcement, to $34.24.




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